The chief executive officer of the “new” PointsBet — shorn of its U.S. business — thinks there is a possibility Alberta will allow private-sector operators of sports betting sites to launch in the latter half of next year.
PointsBet Holdings Ltd. CEO Sam Swanell was asked Wednesday during a conference call for analysts and investors about the long-term trajectory of the company's remaining businesses in Australia and Canada, the latter of which includes access to the competitive market for Ontario sports betting.
Ontario is the only province in Canada that allows multiple private-sector providers of legal sports betting and online casino gambling to take action within its borders, yielding billions in wagering and hundreds of millions of dollars in revenue since the launch of the market in April 2022.
However, the election held earlier this year in Alberta returned the United Conservative Party to power in the western province and sparked hope that an Ontario-like market could open there.
If that happens, the total addressable market (TAM) in Canada for operators such as PointsBet would expand beyond Ontario’s borders in a potentially significant way. PointsBet is among those who see the potential, with Swanell expecting the Canadian TAM to grow.
“We believe that there's a good chance that Alberta, as an example, gets added to the TAM, let’s call it in the second half of calendar year [2024],” Swanell said on Wednesday. “And thus, that $2-billion market could become $2.5 billion.”
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Alberta currently has just one authorized online gambling site, the government-owned PlayAlberta. While the Alberta Gaming, Liquor and Cannabis Commission (AGLC) issued a negotiated request for proposals (RFP) in late 2021 for sports betting services, no winner has been announced.
The new government in Alberta could construct a system similar to its conservative cousins in Ontario, although it would take some time. Swanell was asked later in the call about how a launch in Alberta would affect the company’s path to profitability in Canada, which remains at least a few years away. The PointsBet CEO responded that they don’t see an Alberta sports betting launch as being “material” to the company’s finances.
That is partly because the marketing PointsBet is doing in connection with its Ontario presence “already bleeds” into Alberta, Swanell said. If and when Alberta does launch an Ontario-like market, PointsBet can then start to acquire customers based on the awareness it is already building up out west.
“Apart from that increased marketing, we really don't see a lot of incremental cost,” Swanell said.
A busy year for PB
The comments followed PointsBet reporting financial results for its 2023 fiscal year, which ended on June 30.
It was an eventful year for PointsBet, as it included the company's decision to sell its U.S. business to Fanatics Betting and Gaming for approximately US$225 million. While there are still some boxes to check, PointsBet shareholders approved the transaction on June 30, and "initial" completion of the deal is expected on August 31.
Exiting the U.S. means PointsBet is walking away from a market that provided more than half of its A$5.7 billion legal sports betting handle for its 2023 fiscal year. PointsBet also reported A$391.1 million in total net win for the year ended June 30, A$161.1 million of which was attributable to the company's U.S. business.
The U.S. exit leaves PointsBet with its presence in Australia, Canada, and India, which generated a total net win of A$230 million in the company's 2023 fiscal year but also an A$107.9-million loss. Earnings before interest, taxes, depreciation, and amortization (EBITDA) for the Canadian business were negative A$35.8 million for the year ended June 30.
PointsBet is hoping to turn its remaining business toward profitability, including by adding additional provincial markets in Canada such as Alberta. Swanell said Wednesday that they are expecting revenue from the Canadian business to continue to grow, shrinking its loss over the coming year, before the segment achieves positive EBITDA in the company’s 2025 fiscal year.
“The Canadian business provides shareholders continued exposure to the North American market through a jurisdiction that is more attractive than most U.S. states, with no partner fees, an acceptable tax rate, and iGaming complementing sports betting for the entire market,” Swanell said during Wednesday’s call. “We believe the early stage of the Canadian business complements our more mature Australian business, as well as providing an opportunity to leverage attractive features of our tech stack that aren't available in the Australian market, such as iGaming and online live betting.”
